These days, consumers are becoming more and more conscious about environmental issues. Consequently, they are becoming more selective with the businesses they support and patronize. This is why many businesses are adopting eco-friendly business practices.
But besides earning consumers’ trust, businesses are taking steps towards sustainability for economic advantages. These practices have become a crucial part of their corporate strategy as they realize the financial rewards they can reap from this approach.
Let’s learn more about integrating sustainability into core business operations with the seven financial benefits of sustainable business practices we have identified here.
1. Government Subsidy
Many businesses are becoming “green” for the grants, subsidies, and financing programs they can get from this practice. For example, the Small Business Administration (SBA) grants financing solutions to businesses that adopt green solutions in retrofitting existing structures, new constructions, and advancing green technologies.
For companies needing additional financing for such green projects, options like loans like Lendly can support these green initiatives, particularly when supplementing government funding or covering immediate costs.
Moreover, the Environmental Protection Agency offers grants for qualified programs related to environmentally responsible practices for different businesses. There’s also the Business Energy Investment Tax Credit (ITC), which the federal government offers to businesses that plan to invest in the construction of purchasing equipment to produce renewable energy. Examples of equipment are those used in wind power generation and solar panels.
2. Increased Demand for Products/Services
As we have already emphasized, more and more consumers want sustainable products and packaging. In fact, according to a McKinsey & Co. survey, 66% of all respondents and 75% of millennial respondents say they consider sustainability when buying something. Modern consumers are likely to patronize brands that share the same values and priorities, specifically environmental conservation.
Many businesses are responding to this trend in consumer demands, branding themselves as responsible business entities and securing greater demand for their products and services. More than increased demand, consumers are also willing to pay more for sustainable goods, which means a revenue advantage for those businesses prioritizing sustainability.
3. Cost Savings
Sustainable practices help businesses save costs in many ways. One obvious savings is in energy consumption. Electricity costs have been rising for high-voltage energy users, who are likely to be business owners. Because of this, many businesses have reevaluated their operations and considered a renewable energy transition.
For example, many businesses are now self-producing and storing clean energy through battery storage or Solar Photovoltaic to eliminate or reduce carbon emissions, adopting circular economy models, and paying more attention to energy sources.
4. Increased Profits
Through green practices and sustainability, businesses can translate increased consumer demand for their products into profits, as many consumers are willing to pay more for these values.
However, consumers decide to buy based on some green factors. These include environmentally friendly brands and packaging, a brand recognized for its social value, and goods made from natural, fresh, organic ingredients, among many others.
If businesses emphasize these deciding factors in their core business operations, they are likely to secure increased profits moving forward.
5. Better Reputation
As you become more appealing to consumers with your “green” reputation, you can attract workers and consumers who place great value on environmentally friendly products and services. This can further translate to brand loyalty as you boost your brand reputation.
And with that loyal customer base, you can outperform non-sustainable competing businesses and dominate the market. This competitive edge could benefit your financial performance, thus explaining how a positive brand image can be financially advantageous.
6. New Market Opportunities
With businesses’ growing demand for sustainability, we can also expect new business opportunities and markets. The most obvious example is the renewable energy sector. In the coming years, it’s projected to grow exponentially as more businesses demand renewable energy projects, translating to a rapidly expanding renewable energy market.
Other markets that are expected to grow are green IT systems and services, the electric vehicles market, and the green financing industry, among many others.
7. Tax Benefits
To encourage sustainable business practices, governments worldwide are offering rebates, tax breaks, and other monetary benefits for business. For example, there are tax credits for alternative energy properties for businesses. There are also deductions for the installation of hot water systems, HVAC, or interior lighting that reduce power use.
In addition, there are also tax credits for the use of alternative vehicles that suffice specific fuel-efficient standards. Plus, there’s bonus depreciation for the reuse of certain machinery or equipment in business operations.
Wrapping Up
Sustainability is a global focus, so the entire world is taking part in this shift towards promoting green businesses. This continuously drives businesses to balance profit with the health of the planet as they boost competitiveness. Besides just looking at the financial benefits businesses can get from green reputations, they must look at it more as a social responsibility they need to fulfill so they can give more value to the consumers and sustain their businesses for many more generations.
